Dumping the Debt

Johnny bought a motorcycle he can't afford, so Dave counsels him on dumping the debt.

QUESTION: Johnny bought a motorcycle when he shouldn’t have and recently moved to Miami. He isn’t making enough to afford the payments anymore and is upside-down. He’s selling both of them and wonders what he can do to get out. He owes $13,000 on a $9,000 truck and $13,000 on the motorcycle, worth $12,500.

ANSWER: Cut the price on the motorcycle and get it sold. That’s first and foremost. You’ll have to borrow the difference once the truck is sold. You might have to work an extra job and borrow about $6,000 after selling these to cover the difference and get a beater car. Then pay as much extra as you can in the next year and clean this up.